Govt defers NELP-VIII on tax break concerns

April 17, 2009 14:36 IST

Fearing investor backlash on ambiguity over tax holiday for natural gas, India on Friday deferred roadshows for the largest-ever auction of oil and gas blocks and the new dates would be worked out after elections.

The promotional roadshows for 70 oil and gas blocks offered for bidding under the eighth edition of New Exploration Licensing Policy (NELP) and 10 coal bed methane (CBM) areas were to begin on April 20 but the programme has been deferred.

"Concerns had been expressed by several potential bidders on lack of tax holidays for natural gas, similar to the ones given to crude oil production. We could not have got the issue sorted out just now because of elections. So we decided that that the issue be dealt by the new government," Petroleum Minister Murli Deora told PTI from Mumbai.

The Finance Ministry had in 2008-09 budget scrapped the seven-year tax holiday or exemption from payment of income tax on natural gas production. Though oil and gas naturally occurred together and a single well could be producing both, the incentive was restricted only for crude oil production.

The move drew flak from oil majors who kept away from the previous NELP-VII round that closed after the announcement. The tax issue will have to be addressed after elections and a new schedule for roadshows and bid closing worked out thereafter, Deora said.

The government had launched NELP-VIII and CBM-IV on April 9 and bids were to close on August 10.